Thursday, October 16, 2008

"The right to collect escalating tolls forever." NTTA and TxDOT bury the hatchet

Deal paves way for State Highway 161, two other projects

10/16/08

By MICHAEL A. LINDENBERGERThe Dallas Morning NewsCopyright 2008

The state transportation department and the North Texas Tollway Authority emerged Wednesday as partners in a complicated deal that clears the way for NTTA to build and operate State Highway 161 and two other high-profile toll projects worth billions of dollars.

The deal won 9-0 approval by the NTTA board of directors, though not without a good deal of public hand-wringing first. The vote came just days before a deadline that by law would have stripped the project from NTTA had it not acted by Sunday.

Wednesday's vote means that barring some kind of extraordinary meltdown in the financial markets – not impossible, given daily developments on Wall Street – NTTA will pay $1.1 billion, plus more than $350 million in interest and other costs, to build and operate the 11-mile Highway 161 in southwestern Dallas County. It gets the right to collect escalating tolls forever.

Immediately after the vote, the board approved nearly $3 million in contracts designed to move forward with the highway, which is already under construction and should be open to traffic by June 2012. By accepting the deal, NTTA also agrees to pay $458 million in up-front toll concessions to the state, money that local officials can use to build other North Texas highways.

Partners?

The deal likely would not have come together without an unusual offer by TxDOT, which reached out last month with an offer to help after NTTA announced that it was having trouble financing the project.

Global credit markets have all but stopped financing for public projects in the United States. TxDOT will pledge its revenues to help guarantee some of NTTA's debt, a step that will lower the authority's interest burden and make it eligible for loans that will not require payments during the early years of the toll road's life.

NTTA chairman Paul Wageman and others didn't hold back in praising the role played by Texas Transportation Commission members Deirdre Delisi of Austin, Ted Houghton of El Paso and Bill Meadows of Fort Worth.

"We hope this arrangement could signal a new day in the way TxDOT and NTTA work together," said Mr. Wageman, who in recent years has far more often been cast in the role of opponent in the agency's high-stake political battles with TxDOT. "This is a banner day for the agency."

NTTA vice chairman Victor Vandergriff said the new spirit of cooperation proves Gov. Rick Perry, who appointed the current members of the commission, was sincere when he promised that the agency would act more like partners and less like adversaries in the ongoing debate over toll roads in North Texas.

Mr. Houghton, better known for his hard-line advocacy for Mr. Perry's Trans-Texas Corridor and other top priorities than for extending an olive branch, and the others won significant concessions from NTTA, too.

Tarrant projects

As part of the deal, NTTA has promised to move toward developing two much larger toll roads in Tarrant County that will now be developed as a single project: Southwestern Parkway and the Chisholm Trail extension. Construction costs for the two projects are expected to be at least $1.8 billion.

NTTA will use profits off those roads to build two interchanges TxDOT has long promised to build itself – saving the state $500 million in construction costs.

In celebrating the prospect of putting what he called a "hard asset" on the ground in Tarrant County, Mr. Wageman acknowledged that politicians have been talking about a rebuilt Southwestern Parkway since the 1950s, when Mr. Vandergriff's father, former long-term Tarrant County Judge Tom Vandergriff, was mayor of Arlington.

In moving forward with a Tarrant County project, NTTA takes steps in erasing its history as an agency that provided hard results only for Dallas and Collin counties – a significant step in its political evolution.

"This is a pretty good day," said Michael Morris, transportation director for the North Central Texas Council of Governments. "You have to make progress by taking baby steps, and today these are pretty big steps."

Worries remain

Still, Wednesday's agreements come with a very large caveat: If the credit market remains frozen, or if financial costs rise so high that the basic terms agreed upon by the two agencies no longer make the project viable for NTTA, the deal can be revoked.

Even as he voted for the deal he helped draft, Mr. Vandergriff said he would favor immediate withdrawal from the project if worst-case scenarios materialize and NTTA is forced to choose between Highway 161 and other top-priority projects such as the Trinity Parkway.

Still, such an about-face is unlikely, Wall Street advisers to NTTA and TxDOT said Wednesday.

"We're here today to see that these projects don't get delayed," said Gregory Carey of Goldman Sachs, a top adviser to TxDOT. "And without this agreement, considering what's happening in the markets and given TxDOT's funding issues, there is a real possibility that they could be delayed. The effect of that on the area drivers would be devastating."

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